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#1A. Merck's Keytruda added about $10 billion revenue in last 4 years
Keytruda added $9.7 billion incremental sales over the last 4 years. Its sales grew from $1.4 billion in 2016 to $11.0 billion in 2019, led by approval in multiple indications.Roughly $7 billion of Keytruda's sales come from lung cancer, while the rest about $4 billion comes from other indications ~ cervical, renal, gastric, Hodgkin lymphoma, skin, and head & neck cancer.Our dashboard Keytruda Sales vs Indications Timeline shows its approvals by year, and how approvals map into sales increase.
#1B. Keytruda Could Add Another $22 Billion Revenue By 2025 With Success On 2 Fronts(i) Establishing leadership position in indications it has already entered, including cervical, renal, gastric, Hodgkin lymphoma, skin, and head and neck cancer, collectively worth more than $25 billion
(ii) Entering + establishing leadership positions in indications currently in trial, including breast, colorectal, ovarian, and prostate cancer, worth over $30 billion
In sections below we discuss size of different indications, and Keytruda's current state in each
Keytruda Sales
Keytruda CAGR 2019-25
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#1.1. Lung Cancer: Keytruda is the leader in the lung cancer market [Keytruda $7 billion; lung cancer market > $20 billion]
Lung cancer is the largest market within oncology. Over $20 billion plus sales garnered from top drugs, including Merck's Keytruda, BMS' Opdivo, Roche's Tecentriq and Alecensa, and Pfizer's Xalkori. Keytruda and Opdivo's primary source of revenue is lung cancer, but they are also approved for other indications, including skin, renal, head & neck cancer, and Hodgkin lymphoma, among others. Lung cancer is also one of the largest market, in terms of diagnosis each year. For 2020, it is estimated that 228,820
new cases of lung cancer will be diagnosed in the U.S., and Keytruda will likely continue to be the leader.*** Drug revenues in charts are for all indications combined for a drug, example, Keytruda is about $7 billion in lung, and about $11 billion total in 2019.
Keytruda Sales
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Opdivo (BMY)
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Tecentriq (Roche)
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Alecensa Sales (Roche)
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Xalkori (Pfizer)
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#1.2. Renal Cancer: Novartis leads in renal cancer with sales of over $2 billion, followed by Pfizer with sales of $1.5 billion. [Renal cancer market >12 billion]
Keytruda secured the approval for renal cancer in combination with Pfizer's Inlyta as first line treatment in Aug 2019. The market for renal cancer is over $4 billion in size with top drugs being Novartis' Afinitor and Votrient, Pfizer's Sutent and Inlyta, and Bayer's Nexavar. Afinitor's primary indication is cervical cancer, but it has also been approved for breast cancer. Similarly, Sutent is also approved for pancreatic cancer, and Nexavar is also approved for thyroid cancer.
Afinitor (Novartis)
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Sutent (Pfizer)
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Nexavar (Bayer)
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Votrient (Novartis)
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Inlyta (Pfizer)
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#1.3. Breast Cancer: Roche leads the breast cancer market with sales north of $11 billion, followed by Pfizer with $5 billion. [Breast cancer market > 18 billion]
Keytruda is currently being tested in phase 3 trials for the treatment of breast cancer, and Merck would be eyeing a lion's share in this indication. Breast cancer is the second largest oncology market with over $17 billion sales garnered from top drugs, including Roche's Herceptin, Perjeta, and Kadcyla, Pfizer's Ibrance, and Novartis' Kisqali. Herceptin's primary indication is breast cancer, but it is also approved for gastric cancer. Breast cancer is a large addressable market with over 275,000
new cases expected in 2020.
Herceptin (Roche)
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Ibrance (Pfizer)
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Perjeta (Roche)
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Kadcyla (Roche)
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Kisqali (Novartis)
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#1.4. Cervical And Gastric Cancer: Roche is the leader in cervical cancer with sales of over $7 billion, while Eli Lilly's Cyramza is one of the key drugs for gastric cancer with sales of around $1 billion. [Cervical & Gastric cancer market > 8 billion]
Keytruda secured approval for gastric cancer in 2017 and for cervical cancer in 2018.Cervical cancer drug market size is north of $7 billion with Roche's Avastin being the primary drug. Apart from Cyramza, Roche's Herceptin is another drug approved for gastric cancer.Cyramza's primary indication is gastric cancer, but it has also been approved for other indications, including lung cancer, colorectal cancer, and hepatocellular carcinoma
. Avastin's primary indication is cervical cancer, but it has been approved for other indications, including renal, colorectal, lung, and brain cancer.
Avastin (Roche)
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Cyramza (LLY)
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#1.5. Head & Neck Cancer And Bladder Cancer: Eli Lilly's Erbitux is the approved targeted therapy with sales of around $0.5 billion, while AstraZeneca's Imfinzi with sales of around $1.5 billion is one of the approved immunotherapy treatments for bladder cancer. [Head & Neck And Bladder cancer market > 2 billion]
Keytruda secured approval for head & neck cancer in 2016, and for bladder cancer in 2020.Bristol-Myers Squibb's Opdivo is another drug approved for head & neck cancer, while Johnson & Johnson's Balversa was approved only in 2019 as a targeted therapy for baldder cancer. Other approved immunotherapy treatments for bladder cancer include, Bristol-Myers Squibb's Opdivo, Pfizer's Bavencio, and Roche's Tecentriq. Erbitux is approved for colorectal and head & neck cancer while Imfinzi is also approved for stage 3 lung cancer.
Erbitux (LLY)
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Imfinzi (AZCA)
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#2 Merck's Keytruda Valuation Could Be $200 Billion In 2025
We arrive at Keytruda's valuation using a price to earnings multiple of 20x, the company's adjusted net income margin of 30%, and average sales growth of 20% between 2019-2025.You can modify these drivers in the below charts to arrive at your own valuation for Keytruda.
Keytruda Valuation = A x B x C
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P/E Multiple (A)
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Merck's Adjusted Net Income Margin (B)
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Keytruda Sales
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RocheMerckPfizerBristol-Myers Squibb
